The WhatsApp moment for money is here

The writer is a general partner at Andreessen Horowitz and leads its crypto investment arm

The internet made information global. Crypto is making a similar impact on money. While recent headlines might fixate on prices of bitcoin, a deeper and longer-lasting shift is under way in digital payments. This is the year that stablecoins, or cryptocurrencies pegged to assets such as the dollar, are becoming part of the mainstream for online and international payments.

Call it money’s “WhatsApp moment”. Just as chat apps like WhatsApp collapsed the cost of international messaging from, say, 30 cents per text to zero, stablecoins are doing the same in financial transactions. The numbers bear this out: stablecoins moved over $12tn in value last year, after filtering out bots and other inorganic activity — volumes that are rising towards Visa’s $17tn of transactions last year but made at a fraction of the cost.

In the process, stablecoins are bringing the internet’s original vision of openness and interoperability to finance. Given how blockchain technology allows stablecoins to be programmed, money is in effect becoming software.

While most stablecoin transactions currently come from “crypto-native” and global business dealings versus everyday consumer activity, this is changing. As more improvements arrive to make transactions more frictionless for users, including integration with more traditional finance partners, so too will mass adoption.

People all over the world will barely recognise when they’re using stablecoins when making transactions supported by them. Most people will assume they’re just using dollars. And they will be, because the differences between a stablecoin and a dollar are becoming an abstraction for the end user. With each token backed by one dollar or equivalent assets, the names don’t matter. What matters is that the product is more reliable than any payments technology that came before it while also being practically free and light years faster given that settlement is near instant.

Stablecoins also show what’s possible when policy and technology align. The Genius Act last year established clear US rules for stablecoins. Even more critically, Congress is now considering the Clarity Act, which would regulate the broader ecosystem of blockchain networks and digital assets that underpin stablecoins. The Clarity Act will help determine whether these networks scale to become part of the global financial infrastructure, or stall. When you provide a level playing field for challengers to compete on and room to innovate, markets work their magic. That’s how the web beat incumbents; how the US came to dominate the internet; and it’s how stablecoins will surpass today’s payments structures.

Businesses are already recognising the advantages of stablecoins. Some of the world’s biggest tech companies, banks and retailers are working on initiatives to use them or, like Fidelity, have already issued their own. The payments giant Stripe, which acquired multiple crypto companies in the past year or so, now supports stablecoins at checkout, instantly lowering payment processing fees from about 3 per cent to 1.5 per cent, with plenty of room to go lower. SpaceX uses stablecoins to move money out of places like Argentina and Nigeria, where local banking systems are fragile or capital controls are tight. Some companies use stablecoins to pay their global workforces faster. Eventually, the internet could be transformed into an open market bustling with machine-to-machine commerce, where AI agents broker deals and settle contracts in real time on behalf of users.

Stablecoin adoption also has an under-appreciated second-order effect too: The tokens reinforce dollar dominance in a multi-polar world, creating a strong new source of demand for US debt. Leading stablecoin issuers like Circle and Tether already have nearly $140bn in direct holdings of short-term US government debt, making them a top 20 holder of US debt today. If stablecoin adoption keeps growing at current rates, stablecoins will vault into the top 10 by next year. (The Citi Institute even sees a scenario where stablecoins could be the number one holder of US debt relative to foreign governments and commercial banks by 2030.)

This isn’t just about payments. It’s a realignment of global finance. The internet gave us borderless communication. Stablecoins give us borderless value transfer. With clear rules and market structure in place, they can become both the pipes and the pillars of a new financial system.

Andreessen Horowitz invests in crypto tokens, crypto projects and some stablecoin projects